2015 (3) TMI 1285 - HC - Companies Law

Dismissed appeal on ex-directors' possession order; upheld winding-up petition validity; confirmed Company Court jurisdiction; emphasized fair liquidation proceedings.

Omkar Kanegaonkar And International Asset Reconstruction Company Pvt. Ltd. Versus Deepak @ Gajanan Kanegaonkar and Others.

The appeal challenging the order for ex-directors to hand over possession to the Official Liquidator was dismissed as the lease agreement was deemed ... Seeking to recall the winding up order - IARC has already instituted the proceedings under the RDDB Act and also under the Securitisation Act as claimed by ex-directors of the company - Held that:- We find that the same objection was again taken up by the Ex-directors of the Company in Liquidation before the learned Single Judge in OL Report No.5 of 2013. However, the same was also negatived by the learned Single Judge in its order dated 25th April 2014. These orders are not challenged and have attained finality. In this fact situation, it is now not permissible for the Appellant to challenge the validity of the winding up order in the OL's Report. So far as the objection of Mr. Nedumpara that exclusive jurisdiction to decide the legality or otherwise of the purported lease agreement is with the Rent Courts constituted under the Maharashtra Rent Control Act is concerned, the same is also without any substance. Firstly, the purported lease agreement is unregistered document. The document of lease is specifically required to be registered in view of the provisions of section 34 of the Maharashtra Stamp Act, 1958 and section 17 read with 49 of the Registration Act, 1908. Non compliance with these provisions, makes the document inadmissible in evidence and obviously the same cannot be relied upon. The document of purported lease is, therefore, rightly ignored by the Company Court. For the purpose of winding up process of the Company in Liquidation, the said premises belong to the Company in Liquidation. Be that as it may, under section 446(2)(d) of the Companies Act, the Company Court has jurisdiction to entertain any question of priorities or any other question whatsoever whether of law or fact, which may relate to or arise in the course of winding up of the company. Besides, under section 456 of the Companies Act, all the properties and effects of the company shall be deemed to be in the custody of the Court as from the date of the order for winding up of the company. In the light of these provisions, the Company Court is justified and has jurisdiction to decide the official liquidator's report and the impugned order cannot be faulted on that ground. The appeal is without merit and same is accordingly dismissed with costs of ₹ 10,000/- Issues:1. Challenge to the order directing ex-directors to hand over possession to the Official Liquidator.2. Validity of the winding-up petition.3. Jurisdiction of the Company Court over the lease agreement.4. Jurisdiction of the Company Court to decide questions arising during winding up.Analysis:Issue 1:The appeal challenged the order directing the ex-directors and a related company to hand over possession of premises to the Official Liquidator. The lease agreement was found to be suspicious due to its terms and the relationship between the parties. The Court upheld the Single Judge's decision, concluding that the lease was not genuine and aimed at obstructing the winding-up process.Issue 2:The appellant contested the validity of the winding-up petition, arguing that it was void ab initio. It was claimed that the winding-up order could not be challenged as the secured creditors had already pursued remedies under the Securitisation Act. The Court rejected this argument, stating that the Company Court had the jurisdiction to decide on the winding-up petition.Issue 3:The jurisdiction of the Company Court over the lease agreement was questioned, suggesting that the Rent Court should decide on its validity. However, the Court ruled that the unregistered lease agreement was inadmissible as evidence and rightly ignored by the Company Court. The Court held that the premises belonged to the Company in Liquidation and fell under the Company Court's jurisdiction.Issue 4:Regarding the jurisdiction of the Company Court during winding up, it was established that the Court could entertain questions related to priorities or any legal or factual matter arising during the process. The properties of the company were deemed to be under the Court's custody from the winding-up order date. Therefore, the Company Court had the authority to decide on the Official Liquidator's report, and the appeal was dismissed.The judgment highlighted the importance of genuine transactions during liquidation proceedings and affirmed the Company Court's jurisdiction over related matters. The decision reinforced the Court's role in overseeing fair and transparent processes in winding up companies.